Generation-Skipping Transfer (GST) Tax Planning
Plan beyond the next generation. Preserve wealth with purpose.
Why GST Tax Planning Matters
When transferring wealth to grandchildren or other beneficiaries two or more generations below you, the Generation-Skipping Transfer (GST) tax may apply—on top of estate and gift taxes. The federal GST tax is a flat 40%, making unplanned generational transfers extremely costly.
At Wade Law Offices, we help families in
California and Washington structure long-term gifting strategies and trusts that take advantage of the GST exemption and avoid unnecessary taxation. Whether you want to support grandchildren, fund education, or create lasting multi-generational impact, we guide you every step of the way.
How We Can Help
GST planning integrated with your estate and gift tax strategy:
Leverage your lifetime GST exemption to avoid additional tax layers
Draft and fund generation-skipping trusts (such as dynasty or educational trusts)
Coordinate GST elections on IRS Forms 706 and 709
Help you understand direct vs. indirect skips and their tax treatment
Prevent GST tax surprises for gifts made through wills or revocable trusts
Align your GST planning with your broader estate plan and family goals
Why Clients Choose Wade Law Offices
Smart giving. Tax savings. Lasting impact.
- Knowledge of complex GST rules and exemptions
- Experience designing dynasty trusts and multi-generational gifting vehicles
- State-specific insight into how GST strategies interact with Washington estate tax and California property rules
- Trusted guidance to help you balance family support and tax efficiency
Ready to make a difference—and save on taxes while you do it?
Frequently Asked Questions
What is the Generation-Skipping Transfer (GST) tax?
The GST tax is a federal tax of 40% applied to transfers of wealth made to a person two or more generations below you—typically grandchildren or unrelated individuals more than 37.5 years younger. It's in addition to estate and gift taxes.
Who qualifies as a “skip person” under GST rules?
A “skip person” is either:
- A grandchild or great-grandchild, or
- An unrelated individual who is more than 37.5 years younger than the donor.Trusts can also be considered skip persons if all beneficiaries are skip persons.
What is the GST exemption and how is it applied?
As of 2025, the federal GST exemption is $12.92 million per individual (subject to annual adjustment). You can apply this exemption to lifetime gifts or transfers at death. Any amount over this exemption may trigger the 40% GST tax.
Do I need to file a return for gifts to grandchildren?
Yes—if the gift exceeds the annual gift exclusion or uses part of your lifetime GST exemption, you must file IRS Form 709 (Gift Tax Return) and indicate how the GST exemption is applied. For transfers at death, GST reporting is handled via Form 706.
How can I avoid triggering the GST tax?
You can avoid or minimize GST tax by:
Using your lifetime GST exemption strategically
- Setting up generation-skipping trusts (like dynasty trusts)
- Coordinating your estate and gift tax plan carefully to avoid surprise triggers
- Filing required forms correctly and on time
Are dynasty trusts legal in California and Washington?
Yes. Both California and Washington allow dynasty trusts, though Washington permits them to last much longer (due to more favorable perpetuities laws). These trusts can pass assets across multiple generations while avoiding additional estate or GST taxes.
We’re Ready to Help
Protect your legacy across generations. We’ll help you plan confidently and compliantly.